Companies typically invite three to five investment banks to present their qualifications in a competitive process known as a bake-off. Each bank presents its view of the company's equity story, proposed valuation range, recommended offering size, syndicate composition, analyst coverage commitment, and marketing strategy. In Gurpreet Bal's experience advising companies through IPOs at Foley and Lardner, the most important evaluation criteria are the quality and credibility of the lead analyst who will cover the stock, the bank's distribution capabilities among long-only institutional investors in the company's sector, the bank's track record with comparable IPOs in terms of pricing accuracy and aftermarket performance, and the chemistry between the banking team and company management.
The IPO syndicate typically consists of one or two lead bookrunners who manage the offering, one or two co-managers who participate in distribution, and sometimes passive underwriters added for relationship reasons. The standard gross spread for technology IPOs under $1 billion is 7% of gross proceeds, with the fee split among syndicate members according to their roles. Larger offerings may command lower spreads. The engagement letter with the lead bookrunner is typically signed several months before the anticipated offering and covers exclusivity, fee arrangements, expense reimbursement, and termination provisions. Gurpreet S. Bal advises companies to negotiate key engagement letter terms including the fee structure, underwriter expense caps, and the circumstances under which the company can terminate the engagement without penalty.
The IPO process from organizational meeting to pricing typically takes four to six months. Key milestones include the organizational meeting where all working group parties convene to establish the timeline and work streams, the drafting and internal review of the S-1 registration statement, confidential submission to the SEC for EGC companies, SEC staff review and comment response, testing the waters meetings with institutional investors under the JOBS Act, public filing of the registration statement, the roadshow lasting one to two weeks, pricing the evening before trading begins, and closing approximately three business days after pricing. Gurpreet Bal advises companies to begin IPO preparation, including governance upgrades, auditor transition, and internal control remediation, at least 12 months before the targeted organizational meeting date.
Company counsel plays a central role throughout the IPO process, including drafting and negotiating the S-1 registration statement, managing SEC comment response, preparing the company's board and committee charters, drafting insider trading policies, negotiating the underwriting agreement and lock-up agreements, providing 10b-5 disclosure opinions, advising on corporate governance structures, coordinating blue sky compliance, and managing the overall legal work stream. Gurpreet S. Bal serves as company counsel in IPO transactions, coordinating with underwriter counsel, auditors, and management to ensure all legal requirements are satisfied while maintaining the company's strategic objectives.
If you are reading this, you likely already know who your company counsel should be. The banker decision is harder. Gurpreet's advice: choose a bank that is sized for your market cap. A $400 million IPO and a $40 billion IPO should not have the same lead — there is no world in which a bulge bracket bank cares equally about both. Find the bank where your deal is a priority, not an afterthought.
Gurpreet S. Bal is a Partner at Foley and Lardner LLP in Silicon Valley, where he advises startups, founders, and investors on venture financings, M&A, IPOs, and corporate governance. He has represented clients in hundreds of transactions with aggregate deal value exceeding $60 billion across AI, semiconductors, fintech, and emerging technology. Gurpreet's recent IPO experience includes leading company representation in the only sub-$1 billion U.S. semiconductor IPO in 2024.